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Appeal No. VA91/2/001 AN BINSE LUACHÁLA Irish Shell Ltd APPELLANT RE: Petrol Filling Station at Lot No. 39.41 Fortfield
Road, Kimmage, County Borough of Dublin B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By notice of appeal dated the 10th day of July, 1991, the appellants appealed against the determination of the Commissioner of Valuation in fixing the rateable valuation of the above described hereditaments at £250.00. The grounds of appeal as set out in the Notice of appeal are that:- The Property Written Submissions Mr. Killen referred the Tribunal to Section 11 of the Valuation (Ireland) Act, 1852 and Section 5 of the Valuation Act, 1986. He also referred to the Judgment of Mr. Justice Barron in the High Court in the case of The Irish Management Institute V The Commissioner of Valuation which was delivered on the 9th March, 1990. Mr. Killen said that the shop rental is £2,500 p.a.. Payment to
Irish Shell is based on throughput and calculated at 1.3p per litre. He
supplied the throughput figures as follows:- Mr. Killen said that the rental payments to Irish Shell Ltd. include
rates, repairs, and insurances. He said that levels of valuation are based
on N.A.V. as at November, 1988 and that the appropriate ratio to be applied
to N.A.V. to yield the rateable valuation for that date is 0.63%. He also
said that an allowance known as the "Rates Impact Factor" has
been accepted by the Commissioner of Valuation and that this should apply
to adjust the estimate of net annual value to reflect the increase in
rates, which the increased valuation brings about but which would not
have been envisaged by a tenant when entering a rental/licence agreement. Deduct Mr. Killen said that the application of the Rates Impact Factor would adjust the Net Annual Value to £14,301. He then submitted that the rateable valuation should be £90.00. Mr. Killen submitted one comparison i.e. a petrol station situated in Tallaght comprising "Garage, Shop & Tanks" with a rateable valuation of £140.00 which was settled at 1989 first appeal. A written submission was received on the 29th August, 1991 from Mr. Brian O'Flynn, a valuer with 16 years experience in the Valuation Office, on behalf of the Respondent. In this submission Mr. O'Flynn comments on the grounds of appeal and describes the property. He said that the shop is poorly laid out and would benefit from reconstruction and refitting. Mr. O'Flynn said that the station is owned by Irish Shell and the principal
business carried out by their "agent" (also known as licensee)
is the sale of their products. He said that the licensee is not responsible
for rates, repairs or insurance and operates the shop and car wash for
his own benefit. Mr. O'Flynn said that throughput has declined from approximately 18,000 gallons in 1982 to 11,000 gallons per week at present. He said that sales should remain at this level due to the difficulty in obtaining sites and planning permission for new outlets in the mature suburban area. Mr. O'Flynn then outlined his calculation of the rateable valuation as
follows:- An undated written submission was received from Mr. Declan Fallon, Corporate Services Manager, Irish Shell Ltd. setting out the details of the price control mechanism in relation to motor spirit products. All of the written submissions are attached as Appendix A to this judgment. Oral Hearing Mr. Desmond Killen in evidence described the subject premises stating that since the major capital investment of £200,000 in 1983 only an alarm system, shutters and a non-rateable mobile car washer have been provided. He said that throughput deteriorated since 1983 and that the rental value is based on the shop rent at £2,500 p.a. and throughput calculated at 1.3p per litre with the Respondents paying the outgoings. He argued that in making a rateable valuation assessment one is bound by Section 11 of the 1852 Act and Section 5 of the 1986 Act and must by guided by the judgment of Mr. Justice Barron in the Irish Management Institute case delivered on the 9th March, 1990. He also argued that the "Rates Impact Factor" must be considered and taken into consideration in deciding the Net Annual Value because some premises were not valued for a long time thus creating an additional factor for consideration by an intending tenant in deciding a rent. On the existence of recent valuations which are comparable he said that there were few. He referred to the comparisons contained in the respondent's precis stating that three of them are at the first appeal stage and that the first comparison therein contains an error showing the R.V. at £470.00 which should correctly show it at £300.00. He added that the only recent and determined comparison is at Tallaght and is referred to at page 8 of his precis with his calculations appearing on page 9 thereof. He contended that the Respondents comparisons appearing in his written submission as comparisons number 1, 2 and 3 are each the subject of an appeal and therefore inadmissible. He said that, in relation to comparison 4 that the £35,000 p.a. leasehold rent has been reduced to £30,000 in making the assessment of £190.00 R.V. As to the B.P. Ireland comparison at page 12 he said that this valuation is also under appeal and has not been resolved. He also expressed dissatisfaction with the method used by the Respondent at page 7 of his precis, queried the 15% of the 37.3 pence margin referred to and that an allowance was not made for outgoings under Section 11 of the Act of 1852. He contended that Credit Card and Bank charges, which are not in any way attributable to maintenance, affect a rent to be offered. He said that the "rates impact factor" must be taken into consideration as a tenant would allow for it in negotiating a rent or terms in the case of an agent. The Tribunal ruled, following an objection by Mr. Daly to the use of comparisons by the Respondent, contained in his written submission, which are the subject of appeal and therefore, sub judice, that it shall not in reaching its finding have regard to such comparisons as are under appeal and that cross examination will be allowed on the prices or figures used in the Irish Shell comparison. Mr. Killen expressed agreement with the figures contained in comparison no. 1 at page 8 of the Respondent's precis except that the throughput figure of 3,300,000 litres should read 3,000,000. He also agreed with the figures for 1989 - 1990 contained in comparison no. 3 at page 10 except to say that he has no knowledge as to the purchase price of £433,000 in 1984 or of any changes since that year. As to comparison no. 4 at page 11 of the same precis he said that the R.V. was fixed in 1991 at £190.00 and that the valuation was not calculated on the square foot basis. He could not disagree with the Esso (Irl) Ltd comparison at page 12. Mr. Killen said that he could not agree that the price paid for a premises and the amount expended thereon would be the method used when determining the return on an overall investment but that such return is determined by what the hypothetical tenant will pay. Mr. Patrick Brown, Retail Manager of the Appellant company explained the account produced and, in referring to the copy Trial Balance for 1989 agreed the expenditure of £2,406 on unleaded development, in addition to other items mentioned, was not a recurring item. Mr. Declan Fallon Corporate Services Manager with Irish Shell explained his written submission stressing that motor spirit product prices are revised monthly by Statutory Order. That submission fully explains the system and is appended to this judgment as Appendix "A". He said, that although Irish Shell Ltd. forms part of the Shell group of companies the Appellant company is completely independent in this country. Mr. Brian O'Flynn Valuer for the Respondent said that petrol companies use most of their wholesale margins to subsidise rent. He also said that the car washing site was worth £80.00 per week. He said that he had no certain knowledge of the return on capital expected by oil companies and that the £575,000 paid in 1989 for the Esso filling station at Palmerstown Upper (P. 12 of Respondent's precis) reflects neither an increase or decrease in the prices paid for filling stations. In relation to the Ushers Quay station (P. 11 of Respondent's precis) he said he was not aware of the price paid for the site nor if B.P. purchased and developed it but that he was aware of the leasehold rent paid. He said that he did not have the figures for throughput etc. in relation to the Joe Keane Bray Ltd. station (P. 12 of Respondent's precis). As to the Tallaght Petrol Station referred to at page 8 of Mr. Killen's precis he said that he performed calculations based on (a) improvements and capital value and (b) on the square metre basis on each portion of the premises and arrived at an R.V. of £140.00 by each method but in the case of the subject premises the valuation is reflected in sales. The Valuation Office Notebooks in relation to the assessment on the Ushers Quay Petrol Station by Mr. Hickey of the Valuation office was forwarded. Mr. O'Flynn was referred to page 141 thereof which indicated an annual rent of £35,000 (including a shop and throughput of 364,000 gallons) with an R.V. of £190.00. Mr. O'Flynn was directed by the Tribunal to apply the same method of calculation in arriving at an N.A.V. to the subject premises and in doing so got an R.V. of £125.00. In conclusion he said that the car wash was fully drained and that the area or site only was taken into consideration. Determination
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